Westfield Plans Milan Mall, Expands Foray Into New Markets

Construction work is carried out on the newly developed Westfield Sydney Shopping Centre in Sydney, Australia. The move into continental Europe and South America mark Westfield’s first purchases beyond the U.S., U.K., New Zealand and Australia. Photographer: Sergio Dionisio/Bloomberg

Aug. 12 (Bloomberg) -- Westfield Group, the world’s largest
mall operator by assets, plans to build one of Europe’s biggest
shopping malls in the fashion center of Milan, its second foray
into a new market in a week.

The Sydney-based group will invest 115 million euro ($163.5
million) in two stages to buy a 50 percent stake in the site,
which it plans to develop with Italian firm Gruppo Stilo, it
said in a statement to the Australian stock exchange. Westfield
on Aug. 10 said it would buy a 50 percent stake in Sao Paulo-based mall owner Almeida Junior Shopping Centers SA.

The move into continental Europe and South America mark
Westfield’s first purchases beyond the U.S., U.K., New Zealand
and Australia. Westfield, which spun off the Westfield Retail
Trust to own half of its Australian and New Zealand shopping
centers last year, said at the time the move would give the
group more scope to seek out new opportunities.

“They were more constrained previously because a lot of
their shareholders wanted them to remain focused domestically,”
said John Kim, an analyst at CLSA Asia-Pacific Markets in Sydney,
who has a “buy” recommendation on the stock. “The spinoff of
Westfield Retail gave investors the pure-play Australia
investment they wanted and allowed the company to explore other
markets.”

Westfield shares fell 0.1 percent to A$7.55 at the 4.10 p.m.
close in Sydney, after earlier climbing as much as 1.7 percent.

Italy

“Milan is the dominant retail city in Italy for luxury
brands and is the headquarters of many major retail chains
including Giorgio Armani, Prada and Versace,” Steven Lowy, co-chief executive of the company, said in the statement. “This
opportunity leverages the capabilities we have created in the
United Kingdom and in particular Westfield London and the soon
to be opened Stratford City.”

The company’s entry into Italy comes amid attempts by the
country to accelerate austerity measures to balance its budget
and escape the debt crisis threatening to engulf the region.

Finance Minister Giulio Tremonti told lawmakers yesterday
Italy will seek to ease labor-market laws, sell local services
and possibly raise the capital-gains tax to eliminate the budget
deficit and secure European Central Bank support for its bonds
after Italian borrowing costs reached an euro-era high last week.

“The long-dated nature of Westfield’s development will
make shorter-term European issues less relevant, although they
could impact on Italian consumer sentiment and associated demand
from retailers,” Simon Wheatley, executive director for real
estate investment research at Goldman Sachs & Partners Australia
Pty, said in an e-mailed note.

World Trade Center

This week’s developments follow an agreement last month to
invest $612.5 million to develop the retail part of the World
Trade Center in New York in a venture with the Port Authority of
New York and New Jersey, even as it seeks to sell some
properties in the U.S.

The 170,000 square-meter (1.8 million square-foot) project
is expected to be completed by the Milan World Expo in 2015, it
said in today’s statement.

The mall will be called Westfield Milan and will be managed
by Westfield with Gruppo Stilo, it said.